Where Trump Gets It Wrong On China
By Chris Rossini
The ideas of 'protectionism' and 'mercantilism' are not new. They have ruined countless economies throughout history. Donald Trump did not make these ideas up. Sadly, however, he has embraced them to a large extent. The idea of trade being a zero-sum game where there are winners and losers is deeply flawed.
This flaw appears in one of Trump's latest Tweets, where he writes:
China has been taking out massive amounts of money & wealth from the U.S. in totally one-sided trade, but won't help with North Korea. Nice!
Let's put the topic of North Korea and foreign policy aside and focus on the trade aspect of the statement.
China is not "taking" anything from Americans. The Chinese have no taxing power over the American citizen. To tax is to take by force, and we all know who taxes Americans into the dirt, right?
The U.S. federal government.
They're the takers, and they take trillions of dollars out of American pockets every year. Oftentimes, the money never even reaches our pockets. That's one area where the government manages to be very efficient. It's fantastic at snuffing away the fruits of your labor before you can even see it!
The U.S. federal government doesn't stop there of course. They also bury Americans in trillions of dollars of debt as well. Unborn Americans have an albatross ready for their necks the moment they take their first breath on Earth.
So let's establish first that it is not the Chinese who are vacuuming up America's wealth. It's the leviathan in Washington D.C.
Unfortunately, Trump never talks about this. He's not a limited-government guy. He's not a small-government guy. He never mentions the words 'liberty' or 'freedom' from leviathan. He's just interested in pushing the buttons and being what George W. Bush called himself..."The Decider".
As the new "Decider," Trump wisely wants to avoid confrontation with Russia, but nuclear China seems to be his chosen target, or at least one of them. (Can we maybe not poke at a nuclear power someday? Or is that asking too much?)
So instead of Putin being the foreign villain that we all must despise and fear, it's China. Trump paints them as thieves who take our money in "one-sided trade." This makes no sense. There is no such thing as "one-sided trade". Trade always consists of two sides.
When two parties trade with one another, they value what they're receiving more than what they are giving up. This applies to both sides, and it applies all the time.
So when you go to a retailer and exchange money for a product that's made in China (or anywhere) you're expressing (by your actions) that you value the product more than the money that you're trading away. Likewise, the retailer values the money more than the product that they are selling you. Both parties win! Both parties get something that they value more than what they are giving up.
Voluntary trade is not a zero-sum game with winners and losers. There are only winners!
The fact that the goods come from China, or Mexico, or Timbuktu makes no difference whatsoever. The more voluntary trade that takes place, the more win-win situations there are. So why the fuss about trading with people in another country? Should you only trade with people in your own country, or state? How about your own neighborhood? Or what if a "Decider" someday proposes that you're only able to trade with people that live on your street?
People are people, no matter where they are from. Trade is peaceful exchange. If you don't want to trade with anyone, you're free to refuse. No person acts like a barbaric government that just takes what it wants.
Trade is civilized behavior.
Trump's ideas are backwards and harmful. The people that he has placed into his administration, like Peter Navarro, Wilbur Ross, and Robert Lighthizer are ready to implement terrible policies against the Chinese. So the table is set.
They'll get away with it if Americans let them, or worse, actually cheer them on.
Unfortunately, that looks like the path that will be chosen.
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